Federal Register / Vol. 72, No. 76 / Friday, April 20, 2007 / Notices 19993 

8 15 U.S.C. 78f(b). 

9 15 U.S.C. 78f(b)(4). 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(2). 12 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3Amendment No. 1 replaces and supersedes the 

original filing in its entirety. 

above would allow for access to such 

opportunities if readily available. 

Moreover, a member would need to 

conduct best execution evaluations on a 

regular basis, at a minimum quarterly, 

that include its use of any router 

incorporating the features described 

above. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the Act 8

in general and furthers the objectives of 

Section 6(b)(4) of the Act 9 in particular 

in that it is designed to provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among CBOE 

members and other persons using its 

facilities. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

CBOE does not believe that the 

proposed rule change will impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange neither solicited nor 

received comments on the proposal. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing rule change 

establishes or changes a due, fee, or 

other charge imposed by the Exchange, 

it has become effective pursuant to 

Section 19(b)(3)(A) of the Act 10 and 

Rule 19b–4(f)(2) 11 thereunder. At any 

time within 60 days of the filing of the 

proposed rule change, the Commission 

may summarily abrogate such rule 

change if it appears to the Commission 

that such action is necessary or 

appropriate in the public interest, for 

the protection of investors, or otherwise 

in furtherance of the purposes of the 

Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to 

rule-comments@sec.gov. Please include 

File Number SR–CBOE–2007–34 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–CBOE–2007–34. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Room. Copies of such filing also will be 

available for inspection and copying at 

the principal office of CBOE. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–CBOE–2007–34 and should 

be submitted on or before May 11, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–7493 Filed 4–19–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55630; File No. SR–CBOE–

2007–21] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Order Granting Accelerated Approval 

of a Proposed Rule Change, as 

Modified by Amendment No. 1, To List 

for Trading Options on Commodity 

Pool Units 

April 13, 2007. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 2 thereunder, 

notice is hereby given that on February 

22, 2007, the Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been 

substantially prepared by the Exchange. 

On March 26, 2007, CBOE filed 

Amendment No. 1 to the proposed rule 

change.3 This order provides notice of 

the proposed rule change as modified by 

Amendment No. 1 and approves the 

proposed rule change on an accelerated 

basis. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

CBOE Rules 4.18 Interpretation and 

Policy .01, 5.3 Interpretation and Policy 

.06, 5.4 Interpretation and Policy .08, 

8.9, and 15.1 Interpretation and Policy 

.04 to permit the listing and trading of 

options on securities issued by Trust 

Issued Receipts (‘‘TIRs’’), partnership 

units (‘‘Partnership Units’’), and other 

entities whose value is based on 

underlying commodity interests 

(referred to collectively herein as 

‘‘Commodity Pool Units’’). 

The text of the proposed rule change 

is available at the CBOE, the 

Commission’s Public Reference Room, 

and http://www.cboe.com. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

CBOE included statements concerning 

the purpose of and basis for the 

proposed rule change. The text of these 


sroberts on PROD1PC70 with NOTICES
19994 Federal Register / Vol. 72, No. 76 / Friday, April 20, 2007 / Notices 

4See Securities Exchange Act Release No. 55547 

(March 28, 2007), 72 FR 16388 (April 4, 2007) (SR–

Amex–2006–110) (approving listing criteria 

covering options on securities issued by entities 

holding commodity derivatives). CBOE’s proposed 

rule text includes a definition of ‘‘Partnership 

Units’’ that parallels the definition in Amex’s rules. 

See Interpretation and Policy .10 to CBOE Rule 5.4. 

CBOE notes that, although the proposed definition 

of ‘‘Partnership Units’’ includes a broad universe of 

securities, including those of entities that invest in 

physical commodities. The current filing, like the 

Amex proposal, proposes to list and trade options 

only on Commodity Pool Units that invest in a 

combination of commodity derivative products, and 

not in physical commodities. 5The term ‘‘[commodity] pool means any 

investment trust, syndicate or similar form of 

enterprise operated for the purpose of trading 

commodity interests.’’ 17 CFR 4.10(d)(1). A 

commodity interest is ‘‘(1) Any contract for the 

purchase or sale of a commodity for future delivery; 

and (2) Any contract, agreement or transaction 

subject to Commission regulation under Section 4c 

or 19 of the [Commodity Exchange] Act.’’ 17 CFR 

4.10(a). 6The manager or operator of a ‘‘commodity pool’’

is required to register, unless applicable exclusions 

apply, as a commodity pool operator (‘‘CPO’’) and 

as a commodity trading advisor (‘‘CTA’’) with the 

CFTC and become a member of the National 

Futures Association (‘‘NFA’’). 

statements may be examined at the 

places specified in Item III below. The 

CBOE has prepared summaries, set forth 

in Sections A, B, and C below, of the 

most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The CBOE states that the proposed 

rule change is based on a proposal by 

the American Stock Exchange LLC 

(‘‘Amex’’).4

The purpose of this proposed rule 

change is to enable the listing and 

trading on the Exchange of options on 

Commodity Pool Units that trade, 

directly or indirectly, in commodity 

futures products. Commodity Pool Units 

may hold or trade in one or more types 

of investments that may include any 

combination of securities, commodity 

futures contracts, options on commodity 

futures contracts, swaps and forward 

contracts. The shares of the Commodity 

Pool Units are securities registered with 

the Commission and the offer and sale 

of those shares are subject to the 

Commission’s regulatory oversight. The 

investments held, directly or indirectly, 

within the Commodity Pool Units are 

subject to the Commodity Exchange Act 

(‘‘CEA’’) due to their status as a 

‘‘commodity pool.’’ 5 Therefore, the 

trading of the assets and/or investment 

(e.g., futures and options on futures) 

held within the Commodity Pool Units 

is regulated by the Commodity Futures 

Trading Commission (‘‘CFTC’’).6

Currently, CBOE Rule 5.3 

Interpretation and Policy .06 provides 

that securities deemed appropriate for 

options trading shall include shares or 

other securities (‘‘Units’’) that are 

principally traded on a national 

securities exchange or through the 

facilities of a national securities 

association and reported as a NMS 

security, and that (i) Represent interests 

in registered investment companies (or 

series thereof) organized as open-end 

management investment companies, 

unit investment trusts or similar entities 

that hold portfolios of securities 

comprising or otherwise based on or 

representing investments in indexes or 

portfolios of securities (or that hold 

securities in one or more other 

registered investment companies that 

themselves hold such portfolios of 

securities); or (ii) represent interests in 

a trust that holds a specified non-U.S. 

currency deposited with the trust when 

aggregated in some specified minimum 

number may be surrendered to the trust 

by the beneficial owner to receive the 

specified non-U.S. currency and pays 

the beneficial owner to receive the 

specified non-U.S. currency and pays 

the beneficial owner interest and other 

distributions on deposited non-U.S. 

currency, if any, declared and paid by 

the trust. 

The Exchange proposes to amend 

Interpretation and Policy .06 to its Rule 

5.3 to expand the type of options to 

include the listing and trading of 

options based on Commodity Pool Units 

that may hold or invest, directly or 

indirectly, in commodity futures 

products, including, but not limited to, 

commodity futures contracts, options on 

commodity futures contracts, swaps and 

forward contracts. As part of this 

revision to Rule 5.3 Interpretation and 

Policy .06, the Exchange proposes to 

add paragraph (ii)(F) requiring for 

Commodity Pool Units that a 

comprehensive surveillance sharing 

agreement be in place with the 

marketplace or marketplaces with last 

sale reporting that represent(s) the 

highest volume in such commodity 

futures contracts and/or options on 

commodity futures contracts on the 

specified commodities or non-U.S. 

currency, which are utilized by the 

national securities exchange where the 

underlying Commodity Pool Units are 

listed and traded. 

As set forth in the proposed 

amendment to Interpretation and Policy 

.06 to CBOE Rule 5.3, Commodity Pool 

Units must be traded on a national 

securities exchange or through the 

facilities of a national securities 

association and must be an ‘‘NMS 

stock’’ as defined under Rule 600 of 

Regulation NMS. In addition, 

Commodity Pool Units must meet either 

(i) the criteria and guidelines under 

CBOE Rule 5.3 and Interpretation and 

Policy .01; or (ii) be available for 

creation or redemption each business 

day from or through the issuing trust, 

investment company, commodity pool 

or other issuer in cash or in kind at a 

price related to net asset value. In 

addition, the issuing trust, investment 

company, commodity pools or other 

issuer is obligated to issue Units in a 

specified aggregate number even if some 

or all of the investment assets required 

to be deposited have not been received 

by the issuing trust, investment 

company, commodity pool or other 

issuer, subject to the condition that the 

person obligated to deposit the 

investment assets has undertaken to 

deliver the investment assets as soon as 

possible and such undertaking is 

secured by the delivery and 

maintenance of collateral consisting of 

cash or cash equivalents satisfactory to 

the issuer of Units which underlie the 

option as described in the Units’

prospectus. 

Under the applicable continued 

listing criteria in Interpretation and 

Policy .08 to CBOE Rule 5.4, the 

Exchange shall not open for trading any 

additional series of option contracts on 

Units that were initially approved for 

options trading pursuant to 

Interpretation and Policy .06 to Rule 5.3 

if such Units either (i) Cease to be an 

‘‘NMS stock’’ as provided in paragraph 

(f) of Interpretation and Policy .01 of 

Rule 5.4 (an ‘‘NMS stock’’ is defined in 

Rule 600 of Regulation NMS of the Act); 

or (ii) are halted from trading in their 

primary market. 

In addition, the Exchange shall 

consider the suspension of opening 

transactions in any series of options of 

the class covering Units in the following 

circumstances: (1) Following the initial 

twelve-month period beginning upon 

the commencement of trading in the 

Units on a national securities exchange 

or through the facilities of a national 

securities association and are defined as 

an ‘‘NMS stock’’ under Rule 600 of 

Regulation NMS, there are fewer than 50 

record and/or beneficial holders of such 

Units for 30 or more consecutive trading 

days; or (2) the value of the index or 

portfolio of securities, non-U.S. 

currency, or portfolio of commodities 

including commodity futures contracts, 

options on commodity futures contracts, 

swaps, forward contracts and/or options 

on physical commodities on which the 

Units are based is no longer calculated 

or available. In addition, the Exchange 

is proposing to amend Rule 5.4 

Interpretation and Policy .08, by adding 


sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 72, No. 76 / Friday, April 20, 2007 / Notices 19995 

7The Exchange is proposing to add the phrase 

‘‘for options on’’ in two places in the first sentence 

of CBOE Rule 8.9(a) to clarify that Rule 8.9(a) 

governs Market-Makers in options on Units (versus 

Market-Markets in the Unit underlying the option). 

8The Exchange is proposing to add the phrase 

‘‘trading in’’ to the last sentence of CBOE Rule 

8.9(a) to clarify the conduct governed by the rule. 

9See CBOE Rules 4.11 and 4.12. 

10See Securities Exchange Act Release Nos. 

53105 (January 11, 2006), 71 FR 3129 (January 19, 

2006) (approving the listing and trading of the DB 

Commodity Index Tracking Fund); 53582 (March 

31, 2006), 71 FR 17510 (April 6, 2006) (approving 

the listing and trading of Units of the United States 

Oil Fund, L.P.); and 54450 (September 14, 2006), 71 

FR 51245 (September 21, 2006) (approving the 

listing and trading of the PowerShares DB G10 

Currency Harvest Fund). 

11The offering of DBC Fund shares is registered 

with the Commission under the Securities Act of 

1933 and its most recent Form 10–Q was filed with 

the Commission on November 14, 2006. 

12The offering of DBV Fund shares is registered 

with the Commission under the Securities Act of 

1933 and its most recent Form 10–Q was filed with 

the Commission on November 14, 2006. 

13The offering of Oil Fund shares is registered 

with the Commission under the Securities Act of 

1933 and its most recent Form S–1 was filed with 

the Commission on January 19, 2007. 

new paragraph (d), which provides the 

Exchange with the ability to determine 

that it will not open additional series of 

options on Units if such events occur or 

conditions exist that in the opinion of 

the Exchange make further dealing in 

such options on the Exchange 

inadvisable. The Exchange notes that 

this proposed paragraph is based on a 

parallel provision in Commentary .07(4) 

to Amex Rule 916. 

The Exchange is also proposing to 

amend Interpretation and Policy .01 to 

its Rule 4.18 to require members to 

establish, maintain and enforce written 

policies and procedures to prevent the 

misuse of material, nonpublic 

information it might have or receive in 

a related security, option or derivative 

or in the applicable related commodity, 

commodity futures or options on 

commodity futures or any other related 

commodity derivatives. 

The Exchange is further proposing to 

amend CBOE Rule 8.9 to require that 

Market-Makers for options in 

Commodity Pool Units file with the 

Exchange upon request a list identifying 

all accounts for, among other things, 

physical commodities, physical 

commodity options, commodity futures 

contracts, options on commodity futures 

contracts, any other derivatives based 

on such commodity in which the 

Market-Maker may have directly or 

indirectly engaged in trading activities 

or over which he exercises investment 

discretion.7 In addition, the proposed 

revision to Rule 8.9 further requires that 

no Market-Maker shall engage in trading 

in, among other things, physical 

commodities, physical commodity 

options, commodity futures contracts, 

options on commodity futures contracts, 

any other derivatives based on such 

commodity in an account which has not 

been reported in a manner prescribed by 

the Exchange.8

In addition, the Exchange proposes to 

amend Interpretation and Policy .04 to 

CBOE Rule 15.1 to require MarketMakers to make available to the 

Exchange such books and records or 

other information pertaining to 

transactions in the applicable physical 

commodity, physical commodity 

options, commodity futures contracts, 

options on commodity futures contracts, 

or any other derivatives on such 

commodity, as may be requested by the 

Exchange. 

The Exchange represents that it has an 

adequate surveillance program in place 

for options based on Commodity Pool 

Units. The Exchange may obtain trading 

information via the Intermarket 

Surveillance Group (‘‘ISG’’) from other 

exchanges who are members or affiliates 

of the ISG and has entered into 

numerous comprehensive surveillancesharing agreements with various 

commodity futures exchanges 

worldwide. Prior to listing and trading 

options on Commodity Pool Units, the 

Exchange represents that it would either 

have the ability to obtain specific 

trading information via ISG or through 

a comprehensive surveillance sharing 

agreement with the primary exchange or 

exchanges where the particular 

commodity futures and/or options on 

commodity futures are traded. 

The addition of Commodity Pool 

Units would not have any effect on the 

rules pertaining to position and exercise 

limits.9 The Exchange also represents 

that the margin requirements for options 

on Commodity Pools Units would be 

evaluated for each product the Exchange 

anticipates listing. Any new margin 

rules deemed necessary will be filed 

separately with the Commission. 

This proposal is necessary to enable 

the Exchange to list and trade options 

on an expanding range of Commodity 

Pool Units that the Commission has 

approved for trading, including the DB 

Commodity Index Tracking Fund (the 

‘‘DBC Fund’’), the United States Oil 

Fund, L.P. (the ‘‘Oil Fund’’) and the 

PowerCommodity Pool ETFs DB G10 

Currency Harvest Fund (the ‘‘DBV 

Fund’’).10

The DBC Fund is a Commodity TIR11

and tracks the performance of the 

Deutsche Bank Liquid Commodity 

IndexTM—Excess Return while the Oil 

Fund is a Partnership Unit and tracks 

the spot price of West Texas 

Intermediate light, sweet crude oil 

delivered to Cushing, Oklahoma. 

The DBC Fund is a ‘‘feeder fund’’ that 

invests substantially all of its assets in 

the DB Commodity Index Tracking 

Master Fund, and the Master Fund in 

turn maintains a portfolio of exchangetraded futures on aluminum, gold, corn, 

wheat, heating oil and light, sweet crude 

oil. The Index is derived from the prices 

of those futures contracts. The Master 

Fund’s portfolio is managed on an 

ongoing basis by DB Commodity 

Services LLC, a registered CPO and 

CTA, so that the value of the portfolio 

closely tracks the value of the Index 

over time. 

The DBV Fund is also a Commodity 

TIR12 and a ‘‘feeder fund’’ that invests 

substantially all of its assets in the 

PowerCommodity Pool ETFs DB G10 

Currency Harvest Master Fund, and the 

Master Fund in turn maintains a 

portfolio of exchange-traded futures on 

foreign currencies that comprise the G–

10 countries. The Index is derived from 

the prices of those futures contracts. The 

Master Fund’s portfolio is managed on 

an ongoing basis by DB Commodity 

Services LLC, a registered CPO and 

CTA, so that the value of the portfolio 

closely tracks the value of the Index 

over time. 

Unlike the DBC and DBV Funds, the 

Oil Fund 13 does not invest through a 

master-feeder structure but rather trades 

directly in futures on crude and heating 

oil, natural gas, gasoline and other 

petroleum-based fuels, options on such 

futures contracts, forward contracts on 

oil and other over-the-counter 

derivatives based on the price of oil, 

other petroleum-based fuels, the futures 

contracts described above, and the 

indexes based on any of the foregoing. 

The Oil Fund’s portfolio is managed by 

Victoria Bay Asset Management LLC 

with the aim of tracking the West Texas 

Intermediate light, sweet crude oil 

futures contract listed and traded on the 

New York Mercantile Exchange 

(‘‘NYMEX’’). 

The Exchange believes that it is 

reasonable to expect that other types of 

Commodity Pool Units will be 

introduced for trading in the near 

future. The proposed amendment to the 

Exchange’s listing criteria for options on 

Commodity TIRs and Partnership Units 

is necessary to ensure that the Exchange 

will be able to list options on 

Commodity Pool Units that have been 

recently launched as well as any other 

similar Commodity Pool Units that may 

be listed and traded in the future. 


sroberts on PROD1PC70 with NOTICES
19996 Federal Register / Vol. 72, No. 76 / Friday, April 20, 2007 / Notices 

14 15 U.S.C. 78f(b). 

15 15 U.S.C. 78f(b)(5). 

16 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. 15 U.S.C. 78c(f). 

17 15 U.S.C. 78f. 

18 15 U.S.C. 78f(b)(5). 

19See CBOE Rules 4.11 and 4.12. 

20 17 CFR 242.600(b)(47). 

21 17 CFR 240.19b–4(e). 

2. Statutory Basis 

The Exchange believes that, with the 

commencement of trading of 

Commodity Pool Units on the Exchange, 

amending its rules to accommodate the 

listing and trading of options on 

publicly traded shares of other 

securities that hold and/or manage 

portfolios or baskets of commodity 

futures contracts, options on commodity 

futures contracts, swaps, forward 

contracts, options on physical 

commodities, options on non-U.S. 

currency, and/or securities will benefit 

investors by providing them with the 

same valuable risk management tool 

that is currently available with respect 

to other publicly traded Units (or 

Exchange Traded Funds) whose 

investment assets consist of securities. 

Accordingly, the Exchange believes that 

the proposed rule change is consistent 

with the requirements of Section 6(b) of 

the Act 14 in general, and furthers the 

objectives of Section 6(b)(5),15 of the Act 

in particular, in that it would remove 

impediments to and perfect the 

mechanism of a free and open market in 

a manner consistent with the protection 

of investors and the public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange states that no written 

comments were solicited or received 

with respect to the proposed rule 

change. 

III. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–CBOE–2007–21 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–CBOE–2007–21. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Room. Copies of the filing also will be 

available for inspection and copying at 

the principal office of the CBOE. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–CBOE–2007–21 and should 

be submitted on or before May 11, 2007. 

IV. Commission Findings and 

Accelerated Approval 

After careful consideration, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities exchange 16 and, in 

particular, the requirements of Section 6 

of the Act.17 Specifically, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,18 which requires, 

among other things, that the rules of a 

national securities exchange be 

designed to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system and, in general, to protect 

investors and the public interest. 

Surveillance 

The Commission notes that Exchange 

has represented that it has an adequate 

surveillance program in place for 

options based on Commodity Pool 

Units. The Exchange may obtain trading 

information via the ISG from other 

exchanges who are members or affiliates 

of the ISG and has entered into 

numerous comprehensive surveillance 

sharing agreements with various 

commodity futures exchanges 

worldwide. Prior to listing and trading 

options on Commodity Pool Units, the 

Exchange represented that it will either 

have the ability to obtain specific 

trading information via ISG or through 

a comprehensive surveillance sharing 

agreement with the exchange or 

exchanges where the particular 

commodity futures and/or options on 

commodity futures are traded. In 

addition, the Exchange represented that 

the addition of Commodity Pool Unit 

options will not have any effect on the 

rules pertaining to position and exercise 

limits 19 or margin. 

Listing and Trading of Options on 

Commodity Pool Units 

The Commission notes that, pursuant 

to the proposed rule change, a 

Commodity Pool Unit will be subject to 

the provisions of CBOE Rules 5.3 and 

5.4, and the Interpretation and Policy 

thereto, as applicable. These provisions 

include requirements regarding initial 

and continued listing standards, the 

creation/redemption process for 

Commodity Pool Units, and trading 

halts. All Commodity Pool Units must 

be traded through a national securities 

exchange or through the facilities of a 

national securities association, and must 

be ‘‘NMS stock’’ as defined under Rule 

600 of Regulation NMS.20

The Commission believes that this 

proposal is necessary to enable the 

Exchange to list and trade options on an 

expanding range of Commodity Pool 

Units currently approved for trading 

and that it is reasonable to expect other 

types of Commodity Pool Units to be 

introduced for trading in the future. 

This proposal would help ensure that 

the Exchange will be able to list options 

on Commodity Pool Units that have 

been recently launched as well as any 

other similar Commodity Pool Units 

that may be listed and traded in the 

future 21 thereby offering investors 

greater option choices. 


sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 72, No. 76 / Friday, April 20, 2007 / Notices 19997 

22 15 U.S.C. 78s(b)(2). 

23See Securities Exchange Act Release No. 55547 

(March 28, 2007), 72 FR 16388 (April 4, 2007) (SR–

Amex–2006–110). 

24 15 U.S.C. 78s(b)(5). 

25 15 U.S.C. 78s(b)(2). 

26 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(i). 

4 17 CFR 240.19b–4(f)(1). 

5See Rule 8.3A.01. 

6 ‘‘Any actions taken by the President of the 

Exchange pursuant to this paragraph will be 

submitted to the SEC in a rule filing pursuant to 

Section 19(b)(3)(A) of the Exchange Act.’’ Rule 

8.3A.01(c). 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(5). 

The Commission finds good cause, 

pursuant to Section 19(b)(2) of the 

Act,22 for approving the proposed rule 

change, as modified by Amendment No. 

1, prior to the thirtieth day after the date 

of publication of notice in the Federal 

Register. The Commission notes that the 

proposal is consistent with the 

Exchange’s listing and trading standards 

in CBOE Rules 5.3 and 5.4, and the 

Commission has recently approved a 

similar proposal, after publishing it for 

a full comment period and receiving no 

comments.23 Therefore, the Commission 

does not believe that the proposed rule 

change, as amended, raises novel 

regulatory issues. Consequently, the 

Commission believes that it is 

appropriate to permit investors to 

benefit from the flexibility afforded by 

trading these products without delay. 

Accordingly, the Commission finds 

that there is good cause, consistent with 

Section 6(b)(5) of the Act,24 to approve 

the proposal, as amended, on an 

accelerated basis. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,25 that the 

proposed rule change (SR–CBOE–2007–

21), as modified by Amendment No. 1, 

be, and is hereby approved on an 

accelerated basis. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.26

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–7494 Filed 4–19–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55637; File No. SR–CBOE–

2007–35] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Increase the Class 

Quoting Limit in Several Option 

Classes 

April 16, 2007. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on April 10, 

2007, the Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

substantially prepared by the CBOE. 

The Exchange has designated this 

proposal as one constituting a stated 

policy, practice, or interpretation with 

respect to the meaning, administration, 

or enforcement of an existing rule under 

Section 19(b)(3)(A)(i) of the Act,3 and 

Rule 19b–4(f)(1) thereunder,4 which 

renders the proposal effective upon 

filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

CBOE proposes to increase the class 

quoting limit in several option classes. 

The text of the proposed rule change is 

available on CBOE’s Web site (http:// 

www.cboe.com), at the CBOE’s Office of 

the Secretary, and at the Commission’s 

public reference room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

CBOE included statements concerning 

the purpose of, and basis for, the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. The CBOE has 

prepared summaries, set forth in 

Sections A, B, and C below, of the most 

significant aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

CBOE Rule 8.3A, Maximum Number 

of Market Participants Quoting 

Electronically per Product, establishes 

class quoting limits (‘‘CQLs’’) for each 

class traded on the Hybrid Trading 

System.5 A CQL is the maximum 

number of quoters that may quote 

electronically in a given product and the 

current levels are established from 25–

40, depending on the trading activity of 

the particular product. 

Rule 8.3A, Interpretation .01(c) 

provides a procedure by which the 

President of the Exchange may increase 

the CQL for a particular product. In this 

regard, the President of the Exchange 

may increase the CQL in exceptional 

circumstances, which are defined in the 

rule as ‘‘substantial trading volume, 

whether actual or expected.’’ 6 The 

effect of an increase in the CQL is 

procompetitive in that it increases the 

number of market participants that may 

quote electronically in a product. The 

purpose of this filing is to increase the 

CQL in the following option classes as 

described below: 

Option class Current 

CQL 

New 

CQL 

American Home Mortgage Investment 

Corp. (AHM) .............. 25 30 

Dendreon Corporation 

(DNDN) ..................... 25 40 

Imergent Inc. (IIG) ........ 25 30 

Accredited Home Lenders Holding (LEND) ... 35 45 

Novastar Financial, Inc. 

(NFI) .......................... 30 40 

Neurochem, Inc. 

(NRMX) ..................... 25 35 

The trading volume in these option 

classes recently has increased 

substantially. Increasing the CQL in 

these classes will enable the Exchange 

to enhance the liquidity offered, thereby 

offering deeper and more liquid 

markets. 

2. Statutory Basis 

Accordingly, CBOE believes the 

proposed rule change is consistent with 

the Act and the rules and regulations 

under the Act applicable to a national 

securities exchange and, in particular, 

the requirements of section 6(b) of the 

Act.7 Specifically, the Exchange 

believes the proposed rule change is 

consistent with the Section 6(b)(5) 8

requirements that the rules of an 

exchange be designed to promote just 

and equitable principles of trade, to 

prevent fraudulent and manipulative 

acts and, in general, to protect investors 

and the public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

CBOE does not believe that the 

proposed rule change will impose any 


sroberts on PROD1PC70 with NOTICES